Tuesdays by repute often bring reversals of a strong trend
in Chicago's grain futures market.

Which would imply a bright start.

And corn and wheat futures at least followed the
script to some extent, with the former rising 0.3% to $5.83 a bushel for July
delivery as of 09:40 UK time (03:40 Chicago time).

Not that there was a huge amount in the US Department of
Agriculture's weekly crop progress report overnight to get bulls too excited.

One potential fillip to soft red winter wheat, the type
traded in Chicago, was a steep drop in the condition of the Illinois crop, one
of the biggest producing states for this variety, of seven points rated "good"
or "excellent".

It looks like a problem of too much rain - rather than too
little, the issue which has held back the rating of the hard red winter wheat
crop, as grown in the central and southern Plains.

Crop condition

Still, the overall winter wheat rating remained stable at an,
albeit lowly, 30% good or excellent for a fourth week.

That of spring wheat edged 1 point higher to a lofty 72%, easing
concerns over damage in its northern US growing areas from further heavy rains.

In fact, "the effects of continued rains in the northern
plains are debatable," as many of the low areas suffering flooding "weren't
planted to begin with", Brian Henry at Benson Quinn Commodities said.

And while winter wheat harvest remained behind - at 16%
complete, four points behind the average pace – the delay is not a huge worry
beyond the potential damage from rain the market is already aware of, and this
week is meant to bring drier weather which should allow some catch-up.

On the demand side, Lebanon bought 15,000 tons of wheat for
July-August shipment, from Ukraine, and Jordan is seeking 100,000 tons of
optional origin milling wheat for December-January shipment.

Citigroup's Sterling Smith said that "Taiwan was seen in the
market for US wheat," for 96,180 tonnes in fact.

"However, more of that will be needed to get prices to stop
going down."

'Ultra-favourable
crop ratings'

For corn, the UDSA
crop progress data pegged the domestic crop at 76% "good" or "excellent", a
historically high figure – matching the best in 20 years.

It was, however, a figure which investors had expected,
allowing a marginal Turnaround Tuesday bounce of 0.25 cents a pound to $4.41 ¼ a
bushel for July delivery, and of 0.2% to $4.42 ¾ a bushel for the December
contract.

"Prices are battling with the ultra-favourable crop ratings
that keep showing up week-after-week," one US broker said.

One positive aspect from the demand side was the Indonesian
Feed Mills Association forecast national imports of 3.6m tonnes of the grain
this year, up from 2.95m tonnes last year.

That is also a figure significantly above that implied by
USDA forecasts, of 2.8m tonnes of 2013-14 and 2.6m tonnes for 2014-15.

'Steady market decline'

It was soybeans
which struggled to mount a turnaround, with the July contract falling 0.5% to
$14.15 a bushel and the new crop November lot down 0.2% to $12.14 ½ a bushel.

And this despite a surprise decline in the good or excellent
rate of the US crop, to 73%. While only a 1 point drop, and to a still-high
figure, it contrasted with expectations of a 1-2 point increase in the figure.

Still, if the market was unimpressed by bullish data on Monday,
in terms of decent US exports last week and a higher-than-expected domestic
crush last month, the crop condition rating was unlikely to cut much mustard
either.

"As long as weather is co-operative we expect trendline
yields, or better, to prevail and an overall stocks build would mean current
prices may not hold," one broker said.

"We have a record amount of soybean acres in the US, two
years in a row of record production in South America, and a great start to the
growing year.

"Without fresh bullish information we think it will be a
steady market decline with soybeans outpacing corn lower."

Auction result

Nor did the oilseed gain much support from China, the top soybean
importing country, where the best-traded January contract closed down 0.4% at
4,511 yuan a tonne on the Dalian exchange.

Soymeal for
September tumbled 1.5% to 3,697 yuan a tonne.

The complex was undermined by soft results from the latest
auction of soybeans from state stockpiles, with only 20.3% of the 358,558 tonnes
put up for sale actually sold.

The price, at 4,064 yuan a tonne, was down 4 yuan a tonne
week on week.

The vegetable oil, a major raw material for biodiesel, is
being supported by firm crude oil prices.

Oil World also underlined the role of a prospective El Nino,
which tends to cut output in Indonesia and Malaysia, in supporting futures.

The slow progress of the monsoon through India, and less
than generous amounts of rain so far, are also lifting prices, implying potential
setbacks to the country's own oilseeds production.

The strength in palm oil has offered support too to canola/rapeseed,
an oil heavy, rather than meal heavy, oilseed, although canola for November was
0.2% lower at Can$461.10 a tonne in Winnipeg.

Cotton catch up

Back to the USDA crop progress data, these showed US cotton plantings catching up with the
average, at 95% complete as of Sunday, 1 point behind normal.

On condition, 51% was rated good or excellent, up 1 point
week on week, helped by improvements in Louisiana and Texas.

However, with this factored in already through a USDA
upgrade last week to its estimate for domestic production, the impact on
futures was muted.

Indeed, with Abares trimming forecasts for the Australian crop
in 2014-15 by 13,000 tonnes to 820,000 tonnes, prices edged 0.3% higher to
87.90 cents a pound in New York for July delivery, and by 0.2% to 77.26 cents a
pound for the new crop December lot.